Argentina, Bolivia, Ecuador and Uruguay join the new Latin American Guarantee Fund created by CAF
In Latin America, Micro, Small and Medium-Sized Companies (MIPyME) constitute a diverse business group which generate more than 60 percent of employment and close to 30 percent of GDP.
(Bogota, March 18, 2014).-CAF- development bank of Latin America - announced the creation of the Latin American Guarantee Fund (FLAG) and adherence thereto of Argentina, Bolivia, Ecuador and Uruguay to it, as the first signatory countries.
"CAF's agenda foresees strong support for Latin American SME´s, since we regard them as a key sector for the development of the region," said CAF Executive President Enrique Garcia, while he emphasized the importance of the sector, saying "they are the heart of Latin America´s productive transformation, but they need to overcome barriers that limit their development, to which end it is necessary to promote financing and facilities for them."
The FLAG will impact hundreds of thousands of small and medium-sized companies, by granting counter-guarantees to national guaranty institutions for SME's while also promoting the creation of national guaranty institutions.
Guarantees are the principal restriction the Latin American SMEs face to obtaining bank financing, and the Latin American countries have created policies to remedy this. The guarantee systems have seen strong growth in the region, and have increased tenfold the volume of guaranteed credit over the past decade.
The Fund seeks to contribute to the strengthening of the guarantee systems in the region. It was constituted as a fiduciary fund administered by CAF with the participation of the countries and institutions that decide to contribute to it. The countries of Latin America and the Caribbean will act as the Fund´s areas of operations.
CAF works in two lines of action to support micro, small and medium-sized companies. First, by promoting their access to financing and monetary investment and - later - with initiatives to support productive transformation and improve competitively.
In Latin America, the MSME's constitute a diverse business group which generate more than 60 percent of employment and close to 30 percent of GDP. The sector ranges from personal initiatives to forms of business with export capacity. They act in different markets, in all types of economic activities, in different environments, under a variety of competitive and regulatory conditions.
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